international network supply, traffic, and pricing


Weird: IP Transit Prices Vary a Lot IP Transit Prices, Q2 2015


Contents •  Infrastructure growth

– How much connects countries – How they are connected

•  Pricing trends – Colocation – Networks


Presentation Format


Today’s Winner Will Receive …

“Bumper Pug, Viking Patriot” Laser printer. 2015.


Methodology •  Infrastructure data

– Collected directly from providers via survey – Summed by geography (city, country, route, etc.)

•  Pricing data – Collected directly from providers (and buyers) via

survey – Anonymized


Question #1

How fast was international capacity growth last year?

Doubling every yearA

B

C

D

Doubling every 2 years



X

X

X


Growth Fundamentals Still Solid


Higher Growth in Developing Markets

Used International Capacity Growth, 2010-2014 (%)


… but Scale Still Matters Used International Capacity Growth, 2010-2014 (Tbps)


IP Transit Volumes


How It All Connects Used Inter-Regional Bandwidth, 2014


Capacity Lit Over Time


Question #2

What share of potential capacity across trans-Pacific cables is now lit?

25%A

B

C

D

35%

55%

95%

X

X

X


Still Plenty of Potential Capacity


From a 10G to a 100G World Potential Capacity per Fiber Pair on Apollo Cable, 2003-2014


Trans-Pacific Potential Capacity Potential Capacity as Currently Announced by Operators


Trans-Pacific Potential Capacity Potential Capacity with Two New Cables


Trans-Pacific Potential Capacity Potential Capacity if 100 x 100G Waves per Fiber Pair - All Cables


And Yet…More Cables Coming?! Construction Cost of New Submarine Cables Entering Service by Region, 2012-2016


Private Networks Have Grown Fast


… and Are Now Sizeable


… and Are Now Sizeable (Wow)


There’s a Word for This Type of Market

“Oligopsony”


Examples of Oligopsony •  Oligopsony: market with a few, large buyers •  Example 1


Question #3

What product does this oligopsony (Cargill, ADM, and Callebaut) buy?

Canola OilA

B

C

D

Cocoa

Bauxite Ore

Uranium

X

X

X


Examples of Oligopsony •  Oligopsony: market with a few, large buyers •  Example 1

– Cocoa Industry •  Example 2

– Tobacco Industry


FASTER


Question #4

Which planned undersea cable on the U.S-South America route is code-named for a famous artist?

Da VinciA

B

C

D

Michelangelo

Monet

Warhol

X

X

X


Monet Undersea Cable: New Trend?


Colo Price Varies by Operator Range in Monthly Cost per Kilowatt (4 kw Density), H2 2014


Power and Space Costs Drive Colo Price Median Monthly Price for 4 kw Power, H2 2014


Question #5

After factoring in the cost of 5 cross-connects, which of the following metro areas (on average) features the highest colocation prices?

Washington, DCA

B

C

D

Amsterdam

Johannesburg

London

X

X

X


Power and Space Costs Drive Colo Price Median Monthly Price for 4 kw Power, H2 2014


… But Power Isn’t the Only Consideration Monthly Total Cost of Ownership, H2 2014


“Market Price”: No Such Thing Price Range by Carrier, 10 Gbps, Los Angeles–Tokyo, 2011–2014


10G Prices Falling, Falling, Falling CAGR 10G Monthly Lease Price Reductions for Selected Routes, 2011-2014


Regional Price Differences Narrow 10 Gbps Wavelength Price Multiples over London-New York


Median 10 Gbps Wavelength Prices per Month, Q4 2014

Let’s Not Get Carried Away … Big Differences Still Exist

Route Price

London-New York ~ $6k

Los Angeles-Tokyo ~ $14k

Miami-Sao Paulo ~ $45k

London-Mumbai ~ $80k

London-Johannesburg ~ $183k


Bigger Circuits Mean More Value per Unit 10G-100G Price Multiples for Selected Routes, Q4 2014


Question #6

The IRU price of a trans-Atlantic 10 Gbps circuit is $200,000 in 2015. What was the price of an STM-1 circuit in 1997 on the same route? (Note: one STM-1 = 155 Mbps = 1/64th of a 10 Gbps circuit).

$50,000A

B

C

D

$200,000

$8,000,000

$16,000,000

X

X

X


Concluding Thoughts •  Networks still expanding rapidly

– Good ol’ Internet is behind much of that growth – But content provider “machine-to-machine” traffic

increasingly pushing growth – New networks still being built

•  Colo prices stable; network prices not •  Still big geographic differences in prices

international network supply, traffic, and pricing

Documents